In comments that appear aimed at pressuring
Vodafone Group
PLC to sell its stake in the companies' U.S. joint venture, Verizon Chief Executive
Lowell McAdam
hinted in a meeting with investors this week that Verizon Wireless might not pay a distribution to its two owners this year.

Such a move would deprive Vodafone of a significant source of funds that it could otherwise use to make investments or return cash to its shareholders. Vodafone owns 45% of Verizon Wireless and has a claim on an equivalent proportion of its distributions, but Verizon owns the rest and decides when payouts are made.

Specifically, Mr. McAdam said the priority for Verizon Wireless's cash flow will be to pay down the $5 billion in debt coming due at the unit between now and the middle of 2014 before making payouts to owners. The comments were reported in a note by J.P. Morgan Chase & Co. analyst
Philip Cusick,
who hosted the meeting Tuesday, and confirmed by a person familiar with the matter.

Analysts have long believed that Verizon Wireless uses the payouts partly as a tool to try to influence Vodafone to sell its stake in the joint venture—a huge deal that would likely be valued at more than $100 billion.

Verizon and Vodafone have clashed frequently in the past over the timing and size of the payout. The U.S. carrier bottled up the venture's cash for more than half a decade until about two years ago, when Verizon Wireless agreed to distribute $10 billion to its two owners. Last year, Verizon Wireless agreed to distribute an additional $8.5 billion.

Earlier

When asked about a possible Verizon Wireless deal in a recent interview with The Wall Street Journal, Vodafone's chief executive,
Vittorio Colao
,
said, "We have our mind open on everything."

The latest comments from Verizon come as the U.S. carrier is mounting an increasingly public campaign to bring Vodafone to the table amid resistance from the British company and some of its shareholders.

Verizon has long tried to buy out the Vodafone stake, but differences over price have scuttled deals in the past. That split persists, with the Verizon camp starting with a valuation of around $100 billion and Vodafone believing the asset is worth about $130 billion, people familiar with the matter said.

One large Vodafone shareholder reached Thursday agreed a fair price for the stake would be $130 billion.

"My concern is the joint venture works very well" and would be "a very difficult asset to replace," said the shareholder, whose firm owns more than $500 million of Vodafone stock. "We don't want them to rush into anything."

This shareholder also expressed concern that Vodafone would use the cash proceeds from such a deal to buy assets in Europe of lesser quality—and less-reliable cash flow—than the No. 1 U.S. mobile-phone operator.

At the meeting with investors, Mr. McAdam said the company remains interested in buying Vodafone's stake in Verizon Wireless but doesn't believe a premium is warranted, according to Mr. Cusick and the person familiar with the matter. Verizon already controls the venture, and Vodafone's options for selling the stake are limited to selling to Verizon or an IPO, Mr. McAdam said, according to Mr. Cusick.

Mr. McAdam increased the rhetoric in January, saying his company had the financial capacity to buy the Vodafone stake. Last month, finance chief
Fran Shammo
went further, saying Verizon had come up with a structure that would allow Vodafone to sell its stake without taking a big tax hit.

The cost of financing a big deal with debt is unusually low, and both companies' shares have risen more than 20% this year, an indication investors on both sides like the idea of a deal.

Mr. McAdam also told investors that the company could look to international investments or acquisitions as another way to provide growth over the long term, according to Mr. Cusick. Verizon played down the prospect of doing a big acquisition, saying instead that it could look to establish beach heads in ways that take advantage of the company's global Internet backbone and other data centers around the world.

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